No Blu-ray for the Xbox 360
It seems like Sony was hoping to get fan-boys to put pressure on Microsoft to license and integrate Blu-ray into the Xbox 360. I really doubt that the 360 will ever be a competent Blu-ray player because of several factors.
No self-respecting home theater afficionado would tolerate the jet engine cooling fans of an Xbox 360 during movie playback after shelling out the big bucks on high end speakers. There is no way to fix that problem, nor to integrate a Blu-ray drive into existing consoles, without replacing the box entirely. An unsightly external add-on is a kludge in my opinion - and I may not be alone if HD-DVD add-on sales are anything to go by. So if you are going to replace the entire (working) Xbox 360 altogether, why not just get a PS3 to add to your setup and gain access to some additional exclusive games as well as the most future-proof BD player on the market?
As seen in the latest round of price cuts, Microsoft will try to play the numbers game in order to increase its market share in the lower price rungs where most of the sales happen. The Arcade is now priced well within reach for PS2 and Wii buyers which is sure to make an impact. And for all their rhetoric on downloadable HD content, Microsoft is really pushing the Xbox 360 as mostly a gaming platform if you read between the lines of the various public statements. As cool as it would be to have one device that does it all, I don't think we will see it come from Microsoft.